Grant scammers’ tangled web dismantled, AG Cooper says

Raleigh: A network of fraud artists from North Carolina to Utah is now barred from pitching phony government grants, Attorney General Roy Cooper said today.

Attorneys from North Carolina, the Federal Trade Commission, and the states of Illinois, Kansas and Minnesota have pursued the complex scheme in federal court in Kansas since 2009. Cooper and the other plaintiffs have now won court orders or settlements that resolve the case against fifteen defendants implicated in the scheme.

“Grant scams prey on people’s hopes and waste their money,” Cooper said. “We’re working to shut down these scams in North Carolina and across the country.”

The companies and individuals behind the scam used telemarketing and misleading tactics to convince consumers to pay for services that were supposed to help them win grant money from the government. Consumers who paid for the help never won any grants or received any money.

The defendants

Defendants Real Estate Buyers Financial Network and Martin Nossov of Raleigh are prohibited from illegal telemarketing and from making misrepresentations or misleading consumers under a permanent injunction issued by U.S. District Court Judge Julie A. Robinson. Martin Nossov and his company have also been ordered to pay $5,373,106. Under a settlement agreement, Alicia Nossov of Raleigh agreed to follow laws that govern telemarketing and fair business practices and will pay $126,894, the amount she allegedly made from the scam.

Defendants Affiliate Strategies, Landmark Publishing Group, Grant Writer’s Institute, Answer Customers, and Apex Holdings International, all of Overland Park, Kansas are permanently banned from telemarketing, misrepresenting products and their costs, misleading consumers, and pitching money-making opportunities under a default judgment issued by Judge Robinson. Defendants Brett Blackman, James Rulison and Jordan Sevy of Overland Park, Kansas worked with the companies and agreed to similar bans.

The companies’ assets are being liquidated and any proceeds will go to pay consumer refunds and cover the costs of bringing the case.

Judge Robinson also issued a default judgment against defendant Direct Marketing Services of Utah, banning the company from telemarketing, misrepresentation, misleading consumers, and pitching money-making opportunities. The company was ordered to pay $3.4 million.

Defendants Wealth Power Systems and Aria Financial Services of Utah are banned from marketing grant-related products and services, illegal telemarketing, making misrepresentations, and misleading consumers under a settlement agreement. Justin Ely of Utah, who worked with the companies,agreed to a similar ban. The companies will pay $265,000, the total amount of their assets, toward consumer refunds and the costs of the case. If they’re found to misrepresent their assets, they will have to pay $3.4 million.

The states and the FTC are trying their case against remaining defendant Meggie Chapman in U.S. District Court in Kansas this week.

How the scam worked

The scam began with mailings that promised consumers a $25,000 government grant. Consumers were told to call a telephone number where they heard a recorded pitch claiming that, “Three hundred billion dollars of free government grant money is available right now to anyone who applies for it.” A live telemarketer then urged consumers to pay $59 plus $10 shipping for a guide on how to win grants.

People who bought the guide then got follow up pitches offering grant research services for $995. Consumers were told that the groups’ grant researchers had a “70% success rate”. Consumers who paid the additional fee got a list of grants, contests, loans, and social welfare programs.

Consumers who paid for grant research services then got another pitch, this time asking for $265 per page for grant writing help or $1,000 for grant coaching. Telemarketers who made the pitch encouraged consumers to pay for help applying for multiple grants. No one actually won a grant.

Beware of anyone who promises you free or easy money in exchange for an upfront fee.

Don’t fall for outfits that say they can guarantee you a grant. Legitimate grant programs are competitive, and not everyone who applies gets funding.

Be skeptical about paying for brochures or other materials that are supposed to help you win a grant.

Don’t be fooled by telephone calls or official-looking letters that tell you you’ve unexpectedly won a government grant, and don’t give out personal information such as Social Security or bank account numbers to get a grant.

Steer clear of grant offers that claim you can use the money for anything you want. Most legitimate government grants given to individuals are for specific purposes, such as to pay for emergency repairs after a hurricane, fund research projects, start certain types of small businesses or cover college costs.

Information about legitimate government grant and loan opportunities is available for free from federal, state and local government offices and online at www.grants.gov and www.govbenefits.gov . Students can also explore financial aid resources such as student loans at www.cfnc.org.

Always check out a company before you decide to do business with them. Call the Consumer Protection Division at 1-877-5-NO-SCAM or visit www.ncdoj.gov to check up on a business, report a scam or file a complaint.

“Don’t pay upfront money for help winning grants, no matter what the scammers promise you,” Cooper said. “If you spot a grant scam, report it to my office.”